IRS ‘Mistakes’ Not From Partisanship, Acting Chief Says

May 14 (Bloomberg) -- The acting commissioner of the
Internal Revenue Service said the agency’s errors in targeting
small-government groups stemmed from the lack of a “sufficient
process” and weren’t the result of partisanship.

In an opinion piece in USA Today, Steven Miller wrote that
the IRS sought to centralize its handling of applications for
tax-exempt status following a “sharp increase” in the number
of applications, which more than doubled between 2010 and 2012.

“While centralizing cases for consistency made sense, the
way we initially centralized them did not,” he wrote. “The
mistakes we made were due to the absence of a sufficient process
for working the increase in cases and a lack of sensitivity to
the implications of some of the decisions that were made.”

The IRS decision to use words such as “tea party” and
“patriot” to sort through the applications has ballooned into
a scandal that has led to four separate congressional inquiries.

“The IRS knew what was happening yet they continued to
give us assurances that they were applying the tax rules in a
fair and impartial way,” Senate Minority Leader Mitch
McConnell, a Kentucky Republican, said today on the Senate
floor. “The IRS was in fact singling out conservative groups,
groups who dared to speak up and express their First Amendment
rights.”

President Barack Obama called it “outrageous” for the IRS
to target groups promoting limited government for special
attention.

‘No Place’

“If, in fact, IRS personnel engaged in the kind of
practices that have been reported on, and were intentionally
targeting conservative groups, then that’s outrageous, and
there’s no place for it,” Obama said yesterday at a news
conference at the White House.

The president said he first learned of the IRS targeting
through news reports May 10. On that day Lois Lerner, the IRS
official in charge of overseeing tax-exempt groups, acknowledged
that the agency had targeted for special review groups promoting
limited government and issued an apology.

Calls for congressional probes of the matter followed. They
intensified after disclosures over the weekend that a Treasury
Department inspector general’s report found that IRS officials
knew of the targeting of the groups as early as June 2011, nine
months before the agency’s head told lawmakers it wasn’t
occurring.

The IRS hasn’t explained why it didn’t restart the
screening process in June 2011, which was more than six months
before it started sending inquiries to the groups.

“Mistakes were made, but they were in no way due to any
political or partisan motivation,” Miller wrote.

‘Fixed’ Situation

“We fixed the situation last year, and have made
significant progress in moving the centralized cases through our
system,” Miller continued, adding that more than half of the
cases have been approved or withdrawn. “These applications,
which came from all parts of the political spectrum, received
the same, even-handed treatment.”

The House Ways and Means Committee will hold a May 17
hearing with Miller and Inspector General J. Russell George as
the only witnesses, according to a statement by panel Chairman
Dave Camp and the committee’s top Democrat, Sander Levin, both
of Michigan.

Representative Charles Boustany, a Louisiana Republican and
chairman of the Ways and Means oversight subcommittee, sent a
letter to Miller demanding by May 15 all agency communication
containing the words “tea party” and “patriot” as well as
the names “of all individuals involved in this
discrimination.”

May 2012

The IRS said in a statement that Miller was first notified
by agency staff on May 3, 2012, that “some specific
applications were improperly identified by name” and had been
forwarded for further review.

Senate Finance Committee Chairman Max Baucus also said his
panel would investigate. “Targeting groups based on their
political views is not only inappropriate but it is
intolerable,” the Montana Democrat said in a statement
yesterday.

Senate Majority Leader Harry Reid, said the allegations, if
true, “would be a terrible breach of the public’s trust.” He
said he had “full confidence” Baucus’s panel would “get to
the bottom of this matter and recommend appropriate action.”

‘Fully Accountable’

Obama said the IRS must be “fully accountable” because
“the IRS as an independent agency requires absolute integrity”
so people can be confident it is “applying the laws in a
nonpartisan way.”

White House press secretary Jay Carney said the IRS alerted
the White House counsel’s office about the situation during the
week of April 22. Carney told reporters the administration
“doesn’t have access to, nor should we” have the inspector
general’s report.

House Oversight and Government Reform Committee Chairman
Darrell Issa has said his panel will hold hearings on the IRS’s
actions, which he said represent a clear “abuse of power.”

Representative Mike Turner, an Ohio Republican on Issa’s
committee, introduced legislation yesterday criminalizing IRS
discrimination against individuals or groups based on political
speech or expression. Florida Senator Marco Rubio, a Republican,
said he will introduce the measure in his chamber.

Expanding Inquiry

The Senate Permanent Subcommittee on Investigations is
expanding its inquiry of whether the IRS didn’t enforce the law
on tax-exempt groups to include the extra scrutiny it gave to
Tea Party-affiliated groups.

Miller, the acting IRS commissioner since November, told
lawmakers in July that the agency had grouped together advocacy
organizations seeking nonprofit status “to ensure consistency,
to ensure quality” without saying that some groups had been
scrutinized for having words like “tea party” in their names.

According to a timeline from the inspector general’s
report, Miller became involved in the issue as early as March 8,
2012. That was 19 days before his predecessor, Douglas Shulman,
testified to Congress that the IRS hadn’t targeted groups based
on ideology.

Anti-tax Tea Party groups, some of which include the word
“patriot” in their names, formed after Obama took office in
January 2009 and helped fuel gains by Republicans in the 2010
midterm election that gave the party control of the U.S. House.

In addition to groups with “tea party” and “patriot” in
their names, other organizations selected for the additional IRS
review included those in which “statements in the case file
criticize how the country is being run,” according to a June
29, 2011, briefing given to Lerner, the timetable says.

The IRS has been under pressure to regulate political
spending by nonprofit groups, in particular those falling under
Section 501(c)(4) of the U.S. tax code. Organizations qualifying
for that status don’t have to disclose donors even when engaging
in political activity.